The U.S. dollar this month hit its highest level in decades versus several other major currencies, and experts say that strength could continue into next year. As with most economic trends, there will be winners and losers.
The Capital Region’s petrochemical sector could take a hit because its exports will be more expensive and potentially harder to sell in foreign markets, notes UL Lafayette economist Stephen Barnes, a member of state government’s Revenue Estimating Conference. However, industry customers dealing with supply chain challenges might be more willing than usual to pay higher prices to get what they need, he adds.
Benefits include cheaper imports, which is helpful for consumers and businesses that use imported goods and materials. Americans will find it cheaper to travel internationally, but it will be more expensive for foreigners to visit popular U.S. destinations like New Orleans.
Whether the strong dollar is good or bad for Louisiana’s economy as a whole may depend on how strong it stays and for how long, Barnes says.
“It really is a positive for foreign direct investment ,” says Andrew Fitzgerald, senior vice president for business intelligence with the Baton Rouge Area Chamber.
Foreign companies doing business here are getting paid in U.S. dollars, which strengthens their balance sheets, Fitzgerald says. The strong dollar is unlikely to significantly dampen demand for U.S. energy exports such as liquefied natural gas because there aren’t a lot of options, he adds.
“I would say that we’re uniquely situated, both geographically and industry-wise, to be more on the positive side of the ledger in south Louisiana,” Fitzgerald says.